Research on Services Outsourcing Contracts under Moral Hazard and Participation of Customer Enterprise

Customer enterprise´s participation in outsourcing service can reduce cost and improve efficiency, but the customer enterprise may involve in a dilemma for the moral hazard of the service provider. Focusing on moral hazard of the service provider, a principal-agent model with participation of the customer enterprise is established. Based on the model the relationship of the customer´s participation, the service provider´s effort and revenue sharing contract are analyzed. The results indicate that when the customer´s participation and the service provider´s effort are complementary, the service provider can be incented and the proportion of revenue-sharing should be increased with participation increasing. Otherwise, the service provider cannot be incented and the proportion of revenue-sharing should be decreased with participation increasing.